Don’t cry for Argentina

The other day, in a discussion about the current situation in Greece, a friend asked me what might happen if Greece defaulted and decided to leave the euro zone.

I explained why European banks and the Greek elite might be opposed to such a move (because the banks would have to write down the Greek debt they hold and the members of the Greek elite would be cut off from international credit markets for a time). I then laid out the procedures whereby a country would be able to go back to issuing a national currency (and, no, I told my friend, currencies are no longer backed by gold), and invoked Argentina as an example of what might happen.

The negative view of what has happened in Argentina is, not surprisingly, provided by the Financial Times. But here are the not-so-negative economic data accompanying the article:

A much more positive view is supplied by Yves Smith, based on research by Mark Weisbrot, Rebecca Ray, Juan A. Montecino, and Sara Kozameh. Her conclusion:

No wonder the IMF and the banksters don’t want Argentina to get good press. The Eurozone countries they are wringing dry might get ideas.